Why rocketing rents are holding back UK SMEs

Jason Downes, MD at PowWowNow

Last year, SMEs employed a staggering 16.3 million people; 60% of all private-sector employment in the UK. These small and medium-sized businesses play a key role in supporting the economy and must be nurtured.

However, increasingly expensive commercial rents are a harsh new reality for many small businesses, and rising overheads can even push small businesses into cheaper, more crowded spaces to keep these prices from impacting their bottom line. But how can they find solutions that cut costs, attract top talent, and encourage efficiency?

Competition for central locations

Cities have long acted as central hubs for business evolution. Not only do they cultivate a community of innovators, but they often have the best transport links, and the highest density of office space.

However, there is a huge amount of competition for space in highly sought-after locations within cities and urban spaces, predominantly down to the accessibility and infrastructure that is so readily available.

This demand for centrally located office space in major cities such as London is at its highest in over six years, and there is no indication this level of demand will slow down anytime soon.

Between the increased demand for easily accessible office space and uncertainties surrounding Brexit, small businesses need to be more forward-thinking than ever before to ensure they are making decisions that will support the long-term goals of their business. With these goals and the current business landscape in mind, companies need to think more strategically and adopt technology to tackling workspace challenges.

Demands of the evolving UK workforce

It is not just office space rent that is rising, house prices within cities are also rocketing at an alarming rate. The affordable housing commission recently found that 43% of renters are now facing affordability problems in cities, with 5.5 million of these renters unable to buy a home of their own.

If a company’s workforce cannot afford to live in close proximity to cities, where many SMEs are located, the most talented candidates may be ruled out, limiting the talent pool for business owners.

The demands and preferences of the UK workforce are constantly evolving, according to research, 79% of our current workforce would believe that working flexible working would make them more productive.

As a result, it’s evident that flexibility is increasingly being viewed as a necessity when choosing a job or career path, for both financial and professional reasons. As a result, if SMEs expect to attract the highest calibre of applicants, they must adapt and cater to increasing demand for flexibility and remote working.

Beating rapidly rising rents

It’s clear SME’s are now searching for future proof, sustainable solutions to save money without sacrificing productivity. Not only had workplace technology has advanced significantly over the last few years, but it’s also become more affordable and accessible to small business owners.

These offerings can allow businesses to rethink their space requirements and explore alternatives to fixed desk working practices. One of the primary benefits of new communication technology, such as video calling, is that employees can now work away from an office, without losing contact with their colleagues.

By implementing more flexible, remote working options, businesses not only have the potential to save money and the financial pressure of ever-increasing rents but also meet the demands of a workforce that is looking for more flexible working environments and promote a positive work-life balance. By adopting new technology meetings and catch-ups can now take place with any number of people, anywhere in the world, without impacting efficiency.

Thinking outside the box is crucial if SMEs want to avoid rocketing office space costs. By offering alternative solutions such as flexible and remote working, small business owners can cultivate a productive working environment that not only benefits their employees by creating a more relaxed, fluid environment but also benefits their businesses’ finances too.

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